2021-10-12 P&E Agenda - Item 2 - Attachment 6 - Cost Benefit Analysis

COST BENEFIT ASSESSMENT – PROPOSED LOCAL LAW AMENDMENT: SHORT STAY
LETTING & HOME HOSTED ACCOMMODATION

•     $75 cost per complaint requiring a contact person3.

•     6 complaints lodged on average per premises per annum 4.

The effect of applying the above assumptions equates to additional costs incurred of $2,450 per annum for
premises without a 24/7 response currently included and $950 per annum for premises with a 24/7 response
currently included.

Across 3,600 short stay letting premises, the aggregate cost is estimated at $6.12 million per annum. Council has
indicated that 86% of short stay letting premises are owned by persons residing outside of Noosa Shire, meaning
that $5.26 million would be incurred by property owners outside of Noosa Shire and only $0.86 million incurred by
property owners within Noosa Shire.

Property owners will likely introduce a pass-through fee on users for complaints to be retained from bonds held. A
$250 complaint fee would yield $1,200 per annum assuming the property owner would not be able to levy fees on
20% of occasions due to vexatious/unwarranted complaints5. While this does not reduce the overall economic cost
of additional property management costs, it does transfer costs from within Noosa Shire to users from areas outside
of Noosa Shire (and from within Queensland to users from outside of Queensland).

The end outcome is an aggregate cost of $6.12 million per annum, with $0.25 million incurred within Noosa Shire,
$0.63 million elsewhere in Queensland and $5.24 million incurred interstate or overseas.


    IMPACT SUMMARY:

    Additional property management costs are incurred totalling $6.12 million per annum, with $0.25 million
    incurred within Noosa Shire, $0.63 million incurred elsewhere in Queensland and $5.24 million incurred
    interstate or overseas.


3.3           SUPPLY OF, AND DEMAND FOR, SHORT STAY ACCOMMODATION
During the consultation process, some industry respondents indicated that short-term letting activity will be
impacted as a result of the proposed local law given that the cost of providing short stay accommodation will
increase and if costs are passed through to users the relative cost of Noosa accommodation will also increase.

A theoretical average Noosa short stay letting premises was established to determine the financial implications for
property owners from the additional costs incurred as a result of the proposed local law.

A gross rental revenue estimate of $81,650 per annum (with average occupancy of 62%) was produced on the
basis of the following assumptions which were derived from research into available online rates for a 2-3 bedroom
apartment:

•     $300 gross rate per night in low season (May to September), with occupancy of 50%.

•     $330 gross rate per night in mid-season (October to early December and February to March), with occupancy
      of 60%.

•     $400 gross rate per night in holiday season (mid-December to January and March to April), with occupancy of
      80%.

•     $700 gross rate per night in peak season (Christmas / New Years’), with occupancy of 90%.




3 Council received cost estimates for security callouts ranging from $70 on weekdays to $75-$80 on weekends.


4 It is assumed that the code of conduct for guest behaviour, the enforcement of this behaviour through the formal complaints mechanism and the

fee charged to those requiring complaints to be attended to will lead to a reduction in total annual disturbances.

5 The code of conduct for guest behaviour should form part of the terms and conditions of rental and accountability for inappropriate behaviour

could be enforced through levying a charge on users for complaint responses from the bond paid by users of the premises.




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